MSMEs drive online growth for B2B insurance, tier 3 cities lead with 46% surge in digital adoption.
India’s Micro, Small, and Medium Enterprises (MSMEs), a vital engine of economic growth driving 40% of exports and employing over 110 million people, are embracing digital transformation for quicker and more efficient insurance coverage. While online channels have significantly advanced the B2C insurance space, the B2B segment has traditionally operated predominantly offline. However, this is rapidly changing. Contrary to popular belief, it is tier 2 and tier 3 cities that are steering this shift, reflecting not only rising levels of awareness beyond India’s metros but also a growing sense of trust in online channels.
According to the data of Policybazaar for Business tier 3 cities recorded a remarkable 46% growth in digital insurance uptake, followed by 35% in tier 2 cities, while tier 1 cities saw a growth of 27%. This surge is primarily fueled by commercial lines insurance, which registered a 37% year-on-year growth. Among the products driving this expansion, workmen compensation insurance stands out, followed by property, marine, and liability insurance.
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Sector-specific demand is also shaping the market, with industries such as manufacturing and logistics increasingly turning to liability and marine insurance, spurred by initiatives like “Make in India.” As MSMEs formalize their operations, insurance plays a crucial role in helping them navigate risks, ensure compliance, and scale confidently. This growing reliance on online channels further strengthens MSMEs’ contribution to India’s economy.
